2. Gather Data
5. Review decision
Theory X – Average worker is lazy and dislikes work, Workers need to be controlled & directed, Centralised organisation and exercise of authority
Theory Y – Most people enjoy work, Workers will take responsibility and organised themselves, Decision-making can be delegated
Intuitive Decision Making: This involves individuals making decisions on the basis of a ‘hunch’ or a feeling or instinct.
This is more likely to be used by small businesses that are owned by a single individual or small group.
Such decisions are not always informed by evidence and will often involve a level of, mostly unintended bias and subjectivity leading to inappropriate or ill judged outcomes. In order to make well-judged decisions, an understanding of risks, rewards, uncertainty and opportunity costs is necessary.
Risk – Most decision making involves an element of risk. The decision to open another sales outlet may involve huge additional costs but may not generate the expected sales.
Reward – Risk is often balanced with reward. Business decisions are usually taken in the expectation of some form of reward or benefit for the business. For example, a new incentive scheme for employees should result in an increase of productivity
Uncertainty – Just because a certain project is risky does not mean it should not be pursued. The increased risks may also mean much greater reward
Opportunity Cost – The ‘real cost’ of taking a particular action or the next best alternative forgone, i.e the next best thing that you could have chosen but did not.
Managers’ roles consist of; setting objectives, Analysing – underlying conditions, staff performance, effectiveness of business objectives, Leading, Making decisions, Reviewing.
The model identifies five different management and leadership styles based on the balance of concern for people and production
3.2 Managers, Leadership and Decision Making
Factors that affect leadership styles; personal value systems, Manager’s experience, Confidence in subordinates, Feelings of security, Nature of the business problems, Type of organisation (size, structure), Effectiveness of teams and groups, Skills and experience of subordinates, Pressure (time, costs)
Decision making in any business is very important and takes place at every level of the organisation. A number of different approaches to decision making are used, ranging from scientific to intuitive approaches.
There are two types of leadership perspective:
Traditional – Focuses on command and control and decision making.
Modern – Focuses on inspiring employees, creating a vision, shaping core values and culture and building effective teams.
Leadership is becoming increasingly important as businesses are encountering:
Changes in organisational structures
Flatter + greater delegation
Teamwork + focus on quality assurance
Coaching, support & empowerment
Change is becoming a constant feature of business life
Soft skills of leadershi...